TY  - JOUR
AU  - Lichtenberg,Frank R.
AU  - Kim,Moshe
TI  - The Effects of Mergers on Prices, Costs, and Capacity Utilization in the U.S. Air Transportation Industry, 1970-84
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3197
PY  - 1989
Y2  - December 1989
UR  - http://www.nber.org/papers/w3197
L1  - http://www.nber.org/papers/w3197.pdf
N1  - Author contact info:
Frank R. Lichtenberg
Columbia University
504 Uris Hall
3022 Broadway
New York, NY  10027
Tel: 212/854-4408
Fax: (212) 854-9895
E-Mail: frl1@columbia.edu
M2  - featured in NBER digest on 1990-05-01
AB  - We analyze the effect of mergers on various aspects of airline performance during the period 1970-84, using a panel data set constructed by Caves et al. Estimates derived from a simple "matched pairs" statistical model indicate that these mergers were associated with reductions in unit cost. The average annual rate of unit cost growth of carriers undergoing merger was 1.1 percentage points lower, during the five-year period centered on the merger, than that of carriers not involved in merger. Almost all of this cost reduction appears to have been passed on to consumers. Part of the cost reduction is attributable to mergerrelated declines in the prices of inputs, particularly labor, but about two-thirds of it is due to increased total factor productivity. One source of the productivity improvement is an increase in capacity utilization (load factor).
ER  -